New Zealand’s China – Past, Present and Future

October 17, 2018

John McKinnon served two terms as New Zealand Ambassador to Beijing. He recently returned to New Zealand and this is the text of a speech he gave to the NZ Institute of International Affairs in Wellington on 11 October 2018.

New Zealand’s China – Past, Present and Future

Address to the Wellington Branch of the New Zealand Institute of International Affairs

Thursday 11 October 2018

Thank you for the introduction and for the invitation to speak to you today.

May I say at the outset, the views expressed by me today are mine alone, not official, and nor am I representing the government.

My audience is New Zealanders rather than Chinese so I ask Chinese in the audience to forgive me when I belabour points that they may think are obvious. I can assure them that they are not obvious to many New Zealanders.

I am pleased to be speaking adjacent to the Ian McKinnon Atrium and also in one of the Rutherford House lecture theatres. My high school education was in Nelson College and I was a boarder in Rutherford House. Ernest Rutherford was, and I suspect still is, by far and away the most distinguished old boy of the college, so it is an honour to be speaking at a place named for him.

I last spoke to the Wellington Branch of the Institute five years ago. That was when I was Executive Director of the Asia New Zealand Foundation, and my topic was ‘Discovering Asia’, on the work of the Foundation. My subject today is narrower – just China – but some of the themes I touched on then I will replay this evening.

So to start with my title: New Zealand’s China. Is it a punctuation mistake? A rogue apostrophe which has crept in where it is not wanted? No. I am deliberately talking about China from a New Zealand perspective, rather than China as such. I may know more about the latter than many, but I am certainly not an expert. But if I cannot talk about New Zealand and China, then I probably should not be talking to you at all.

So when and where to begin. For me it is easiest to do so in September 1975, over 40 years ago, when I was sent off to Hong Kong to spend two years of full time study of the Chinese language. That was followed by two years in the New Zealand embassy in Beijing and on returning to New Zealand a similar number of years doing China work, including escorting a number of Chinese delegations around our country. Then a large gap intervened.

I returned to China in February 2001 for a first term as New Zealand’s ambassador in Beijing, and a second such period, from 2015, has just concluded. In all I have spent nearly 10 years of my life living in China, all of it in Beijing, and even longer professionally engaged with China in one way or another.

Of course I am not so egocentric as to imagine that New Zealand’s connection with China began in September 1975. My colleagues Chris Elder and the late Mike Green have written up New Zealand’s China contacts from the very first in the late 1790s, through to 1972, when New Zealand extended diplomatic recognition to the People’s Republic of China. Other colleagues such as Matt Dalzell have written in detail on periods within that time frame. Some of that history is not very edifying. I was amazed to discover, when recently re-reading Andre Siegfried’s 1904 classic, Democracy in New Zealand, that he has a chapter unabashedly entitled ‘The Government and the Yellow Peril’.

1949, when the Chinese civil war concluded and the People’s Republic proclaimed, was a turning point in this ‘pre-history’. It became even more so when nine months later the Korean War broke out, with New Zealand participating in the UN forces on one side, and Chinese soldier volunteers, as they were officially designated, coming to the aid of their beleaguered neighbour on the other side a few months later.

In the 20 years which followed, New Zealand, while not afflicted by McCarthyism, kept its official distance from the new China and maintained diplomatic recognition of the previous government, whose jurisdiction was limited to Taiwan and some adjacent islands. Yet even during this time there were some contacts between New Zealanders and mainland China, I say ‘New Zealanders’ as these were not officially sanctioned contacts.

One I only came across earlier this year. Between April and June 1956 Roger Duff, the Director of the Canterbury Museum, was part of a group of prominent New Zealanders visiting China at the invitation of the Chinese government. The hand of Rewi Alley, New Zealand’s long-term resident ‘friend of China’ was behind this. Rewi subsequently donated much of his extensive collection of Chinese art and artifacts to the museum. Roger Duff’s diary from this visit has just been published by the Canterbury University Press and makes fascinating reading. The diary is interleaved with comments from other members of his group, and what makes it so intriguing is that the group were far from being of one mind about the China they saw. With Ormond Wilson leading, and artist Evelyn Page, historian Angus Ross, journalist /academic James Bertram and rural personality Charles Hilgendorf as members amongst others, this is hardly surprising.

The other I have known about for some time. It was the visit by a three person film group, of whom two were the redoubtable couple Rudall and Ramai Hayward. This took place at the instigation of the New Zealand China Friendship Society, set up in 1952 when there were no other groups committed to dealing with the new China. The group went to Guangzhou, Shanghai, Beijing and Wuhan. In the capital Ramai Hayward memorably placed a Maori cloak on the shoulders of Chairman Mao. One of my proudest achievements in China was to track down this cloak, which had been mis-catalogued as being from Sri Lanka. The three films that the Haywards made through this venture were never screened commercially, maybe ‘Red China’ was just too ‘hot’ for the commercial move theatre operators to handle at that time. But I was able to obtain a copy of one, thanks to the New Zealand Film Archive, and showed it to selected audiences in Beijing in both my terms as ambassador. It was re-edited by film producer George Andrews a few years ago. It is a fascinating and to my mind quite objective account of China in 1957, just before the anti-rightist campaign and the traumas of the great leap forward and the cultural revolution.

New Zealand extended diplomatic recognition to China on 22 December 1972, one day after Australia. Despite what is commonly believed, we were not amongst the first western governments to recognise the People’s Republic of China as the government of the whole country. The Nordics, Switzerland and others had done so in 1950, France in 1964, Canada and Italy in 1970 and even Japan earlier than us in 1972 – albeit after the Nixon/Kissinger opening to China in 1971/1972. But it was significant, and not just for New Zealand. What made this step memorable was that this was two US allies in the Pacific taking this step, ahead of the US doing so itself, coincident of course with and in some respects a result of the change of government in both capitals from conservative to labour.

So much for the past. New Zealand recognised China in December 1972 at almost at the same time as the United Kingdom joined the then European Economic Communities. But while in one sense this reaching out to China was part of a policy of diversification away from Britain, which also saw New Zealand reaching out to the Middle East, the then Soviet Union and Latin America, the fruits of this policy so far as China was concerned were some time coming. Or to put it more positively, the recognition of China was recognition that China was and would be a significant political actor regionally and globally and that it was not credible any longer for New Zealand not to have direct links with it, regardless of what economic prospects that relationship held out.

So I date the present from December 1978, six years after we established diplomatic relations. This was the time when at the third plenum of the 11th congress of the Chinese Communist Party, Deng Xiaoping, who was back in power for the third time in his life, launched the policy of ‘reform and opening up’ which has characterised China ever since. Indeed it was Deng Xiaoping’s new policy which created in due course the market for New Zealand’s goods and services by enriching the Chinese people and by accelerating the growth rate of its economy. That policy was never as straightforward as it might have been seen from outside, there were many currents running in China and still are. But the outcome was unequivocal and can be seen by any visitor to almost any part of China now. Deng’s policies are widely credited with lifting more people out of poverty than any other single action anywhere else in the world – the figure is given as 700 million in a recent Chinese speech – a testimony to the effectiveness of those policies but also to the sheer size of China, with its hundreds of millions of people. Poverty is still of concern to the Chinese leadership as are discrepancies in growth between different parts of the country, the eastern seaboard exemplified by Shanghai being well ahead of other parts of the country whether rustbelt Northeast or the western interior. It is noteworthy that Chinese president Xi Jinping has recently been touring the Northeast and urging self-reliance upon it.

For New Zealand the impact can be seen in our trade statistics. Initially exports to China were very low, 0.96% of our overall exports in 1974, or NZ$1.7 million. There was a blip in 1989 with the suppression of the student uprising at Tian’anmen in June 1989, but with Deng Xiaoping’s ‘southern tour’ in 1992, China’s upward trajectory resumed. For most of my first term as New Zealand’s ambassador to China [2001-2004], China was our fourth or fifth most important trading partner. For most of my second term [2015-2018], China was first or second, nudging Australia in or out. In that first term China joined the World Trade Organisation, then headed by New Zealander Mike Moore, and in between my two terms China and New Zealand concluded a free trade agreement (2008) which is now being upgraded. Dairy products dominate our exports to China, but most of our significant commodities also have a place – timber, seafood, kiwifruit, and then on the services side, education and tourism. New Zealand has benefitted from the growth of the so-called Chinese middle classes – however they are defined.

That was an important, perhaps for New Zealand the most important aspect of our relations with China in what I am defining as ‘the present’. But what was also important was China’s increasing role in regional and global affairs. The regional organisations which were created in the 1990s and later all included China – the ASEAN Regional Forum (ARF), APEC, the East Asia Summit (EAS). China has forged bilateral and plurilateral links in many other directions and now takes an interest in regions of the world much closer to New Zealand, such as the South Pacific and Antarctica. In some respects China is playing catch up – because of its isolation in the 1950s and 1960s, whether imposed or self-imposed, it was not always seen as a paid up member of the international community. The Non-Aligned Movement (NAM), decolonisation and China’s seating at the United Nations successively put paid to that, but the habits of self-reliance and introspection are taking longer to dissipate.

In other respects it is China’s growing prosperity and wealth which give it the wherewithal to play a more significant role in world affairs. We can see this in the formation of the Asia Infrastructure Investment Bank (AIIB) and in China’s Belt and Road initiative (BRI). Some assert that China’s wealth is the product of its unfair exploitation of the multilateral trading system. That can be argued but I believe it is beside the point. Once China opened itself to the world, it was almost bound to increase its prosperity, admittedly from a very low base, and given the size of its population and resources, to have a commensurately larger influence in the world.

So this is the China we have been dealing with in the present – increasingly prosperous, a growing market for New Zealand’s goods and services, a participant in nearly all regional and global organisations of interest to New Zealand, hence in all dimensions a country with which we need to engage and exchange views.

So what of New Zealand’s future China. I am not a stargazer so I will not predict but I do point to a number of trends which in my mind will alter the nature of our relationship with China and make its management more complex.

The first, off the back of the free trade agreement and increasing prosperity in China, is an increasing economic profile of China in New Zealand. This is manifested in student flows, tourists, migrants, investors as well as imports of goods. New fields of cooperation are emerging. In my time in China these included TV and movie making, wine, as well as agritech and science. New Zealand does well in China. According to Statistics New Zealand, we had a $3.6 billion dollar goods and services trade surplus with China for the year ending December 2017, amongst that being a record level of dairy products. So in the logic of international trade, China will have, or aspire to, a commensurate economic profile in New Zealand. Despite these figures, the New Zealand China Council recently reported that 41% of respondents in a recent survey believed that China was doing better out of the relationship than New Zealand. My view is that both economies are doing well out of the relationship, albeit in different places. Investment flows from China are certainly greater now than those from our more traditional sources of investment – Australia, the UK, Japan and the US. But they are widely dispersed, in many sectors, not, as that China Council survey also reported as a common belief, concentrated in commercial property and residential housing.

The Asia New Zealand Foundation has been monitoring New Zealanders views of Asia for many years. In general we all support exporting to other countries – support for that activity has generally run at 90% or thereabouts. We are less certain when it comes to inward economic transactions. I have noticed this since returning to New Zealand in May. With that increased economic profile has come increased anxiety. As the New Zealand China Council report demonstrates, not all of this anxiety is fact based. And some of it is anecdotal, sparked by actions by one or two individuals. But such actions can have far reaching reputational consequences. There is of course a Chinese saying to describe this situation: yitiaoyu xingle yi guo tang, or, one bad apple spoils the barrel. But whatever the foundation, such sentiment cannot be ignored. I flag it here not to provoke more debate, but as one factor which is making for a more complex China policy making environment than we have had hitherto in this country.

In considering Chinese reactions to the recent focus on this aspect of the relationship, we need to distinguish between the views of individuals and those of the Government. From my experience the Chinese government’s concern is with non-discrimination. As very sensitive to matters of sovereignty itself, it recognises the same in other governments. But it would be troubled if measures were adopted which appeared to single out one group or nationality for adverse treatment.

The second factor adding to complexity are changes in China itself. China’s current leader, Xi Jinping, is an impressive and able man, and his thought is now embedded in the constitutions of the Communist Party and of the State in a way which has not been seen since the days of Chairman Mao. To explain to those not so familiar with this aspect of Chinese political life. Chairman Mao Thought was added to the foundational documents of China alongside Marxism-Leninism in the 1940s. No subsequent leader has engendered such canonisation, but in recent decades the contributions of China’s successive leaders have been written into successive revisions of the constitutions. So we have Deng Xiaoping Theory, the Important Thought of the Three Represents (associated with Jiang Zemin, but he is not named as such), the Scientific Outlook on Development (ditto for Hu Jintao) and now Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. There is nothing mysterious about these references. They are a way of demonstrating that China can evolve, while still remaining faithful to its originating principles. What is noteworthy is that the references to Xi Jinping Thought, and again, this is a matter of record, have been inserted into the constitutions at the same time as Xi himself has been selected for another five year term as both general secretary of the party and president. This is perhaps more significant than the widely noticed removal of term limits on the presidency, which whatever its purpose, did align the position of head of state with that of the party leader, the two positions having been held by the same individual since 1993.

This leadership controls every aspect of Chinese life. Again, this is not surprising, it is part and parcel of the mode whereby a single party state ensures its continuity and survival. But China in 2018 is very different from the China in which I first worked in 1978, or even of 10 or 20 years ago. This is now an internationalised society, where information abounds, many travel, and by and large people’s lives are better now than they were in the past. These are generalities and I don’t wish to suggest that all is sunny in China. It is not. But for the government, this is the larger reality, and the means of ensuring continuity and survival have to correspond. And they do, whether that is through the internet, social media, party committees in businesses, strict supervision of educational and religious institutions, and the like. For New Zealanders it is strange to see an emphasis on rule by law, if not rule of law, coupled with apparently arbitrary actions by the state. A recent Chinese melodrama, drawing on the popular theme of anti-corruption, concluded with one of the protagonists saying that power has to be brought within the cage of order. And it is order, in other words stability, which is important to many Chinese, many having experienced in their own lifetimes what happened when there was none.

As I say, none of this is surprising, given the nature of contemporary China, but this has also spilled over into a very contentious debate on whether this in-country influence is reaching out beyond China’s borders. Given China’s history, given the role that overseas Chinese played in the overthrow of the Qing empire, or that returned workers and students did in the evolution of the Chinese communist party, it maybe would be more surprising if China was not preoccupied with what was happening outside China as well as within. In the book I mentioned a few minutes ago, Roger Duff’s diary from his 1956 visit to China, the compilers note that people’s diplomacy in the first decade of the People’s Republic was targeted in part at shaping foreign perceptions of China. And so it is today. But I have more confidence than some that in New Zealand [I don’t presume to speak for other countries] we have the wherewithal in terms of our law, practices and values to respond if we need to, and to deal constructively with both allegations and facts of interference, whatever country they come from, and so far as China is concerned, in a manner which is in accord with the mutual respect that subsists between us.

Third, the international arena is another where the China has been more visible and present than before. In some ways this is optical, China’s objectives have not changed but its ability to pursue them has. This can be seen in the South China Sea, to which China in successive administrations has laid claim, at least since World War II. China has now turned the ‘features’ it actually controls into artificial islands. Such island building takes place elsewhere, the Dutch are past masters at it, but this is taking place in a contested region, and in a manner which permits militarisation of those features, so disturbing a delicate balance amongst the claimants and other outside but interested parties. New Zealand is amongst the latter, and this is one issue on which we disagree with China, and on which it would probably be misleading even to say that ‘we agree to disagree’. It is sensitive for China, impinging as it does on what it defines as national sovereignty, and it is sensitive for New Zealand, as respect for international law and the tribunals which administer it are central to our sovereignty. So the New Zealand government urges restraint on all parties, and welcomes steps towards establishing a binding code of conduct between China and ASEAN.

Closer to home China is now more present in the South Pacific and Antarctica than it was 10 or 20 years ago. China has been a consultative party under the Antarctic treaty since 1985 and a dialogue partner of the Pacific Forum since 1990.

This stepping out by China has elicited strong reactions amongst other countries, not least in the United States. I wrote on this very subject five years ago, in an article which was published in the New Zealand International Review. I reread it recently, and was pleased to see that most of what I wrote then still stands. But my optimism that China and the United States would find the means to manage the differences which necessarily exist between them has been dented by recent events. The aspects of the ‘trade war’ are many and various – intellectual property, subsidisation of state owned enterprises, mutual treatment of investment. I will not comment on these except to note that New Zealand’s interest is less in the issues themselves (many of them do not as such impinge on our economic relationship with China) but to their relevance to the principles of the multilateral trading system, including its provisions for disputes resolution, which we benefit from enormously. But I will say that such disputes, whether in their own right or as a proxy for something much deeper, do not make it easy for countries such as ours to navigate between two important but very different partners. It was reassuring to read the editor of the Global Times, itself not a notably liberal paper, say that China must avoid retreating into conservatism and nationalism in the face of American actions, which of course suggests that such a retreat is indeed a risk.

China is also now, what is was only potentially in 1972, a great power. The fabric of international society is woven by the ability of the international rule of law to constrain the interests of large powers such as China. This means that New Zealand, as a country which invests in and benefits from the international rule of law, has expectations of China, as it does of other great powers. That they will comport themselves appropriately, especially towards those who have less power than themselves. That is the true mark of greatness. It is pleasing to see how China has responded to these expectations, such as through its policies on climate change, and its championing of the multilateral trading system. New Zealand, along with many other countries, will be represented at China’s international import expo, to be held in Shanghai in November, and marking the 40th anniversary of reform and opening up. There are many areas where New Zealand welcomes China’s voice and can and does work with it in international forums.

China is of course very different from New Zealand, in all sorts of obvious ways – area, population, location, history – but also in terms of its political and social make-up. It is important to realise this, as without this understanding we can be blindsided by aspects of China, especially in areas such as the definition and protection of human rights and the like, where our values are very far apart, and where we see or hear of developments in China which are at odds with those of our own.

In conclusion, the quality of our relationship with China, past, present and future, is not to be determined by how much we agree, or by how much of a model that relationship is, or by how many young New Zealanders study Chinese (much though I would like to see more doing so). Rather by our ability to maintain a relationship based on mutual respect and mutual benefit despite those differences. To that I would add mutual understanding. We need to understand China more, just as we expect China to understand us. We need to be transparent and consistent in our dealings with China, and with all countries in the world.